Customer behavior analysis through consumer inference

The essence of marketing theory lies in the perspective of the customer. The customer’s perspective is having a logical understanding of the customer’s psychology and behavioral mechanisms, rather than simply lending an ear to customer opinions. Customers sometimes make illogical decisions, but try to explain them in a logical manner. Here, I would like to examine “halal certification” from the customer’s perspective.

Recently, there has been a great interest in halal certification by Japanese businesses. Halal means something that is acceptable under Islamic law. For example, food that doesn’t include ingredients originating from pork or alcohol, which are banned by Islam, are permitted to be consumed as halal. On the other hand, haram means to be banned and indicates the intake of forbidden food such as pork. And halal doesn’t only apply to foodstuffs, it covers a wide range of goods such as cosmetics, medicines and clothing. Halal certification means Islam and governmental agencies certified the products as halal after inspecting ingredients and manufacturing process. Here, products being halal and being certified as halal are separate issues. There are many halal products which have not been certified.

With a backdrop of an increase in the purchasing power of Muslim consumers due to economic development in emerging nations and the maturation of markets in developed countries, companies in developed countries are searching for new business chances and have focused their interest on halal certification. However, under the silent assumption that halal certification is a plus for business (sales, luring and keeping customers), it is difficult to say that it has been adequately discussed from the customer’s perspective. Let’s take a look at the psychological mechanisms of the customer towards halal certification.

Framework of consumer inference

Considerable costs are generated by halal certification. Because of this, even in countries with a majority Muslim population, many local companies (even if their products are halal) are not certified. In other words, Muslim consumers are buying and consuming products without clearly knowing if they are halal or not. In these cases, they decide whether the product in front of them is halal through inference.

When required information is lacking, individuals make decisions through inference based on the limited information available. For example, when there is insufficient information regarding quality, the quality of the product is decided based on its brand and price (attribute inference).

Inference can first be divided into,
A）Induction inference: deriving general rules and universal statements from specific phenomenon, and
B）Deduction inference: deriving individual decisions from general rules and universal statements.

Also, it can be classified into,

C）Stimulus-based: decisions made based on information giving to you at the time, and
D）Memory-based: decisions made based on knowledge, beliefs, attitudes and schema already acquired,

as information processing within the inference. It can be further classified into,

E）Singular judgment: decisions made on a single subject, and
F）Comparative judgment: decisions made by comparing multiple subjects.

So, as a framework of inference, 8 possibilities can be offered, (A or B) and (C or D) and (E or F). For example, inference with a deduction inference, memory-based and singular judgment.

Judging halal by attribute inference

As mentioned above, because the halal nature of products and halal certification are different issues, in most cases, even if the products are halal, they haven’t been certified. It is also difficult to determine whether a product is halal or not at first glance. For example, a consumer cannot distinguish if a certain spice contains ingredients originating from pork. There, the Muslim consumer uses the information on other attributes that are available to make a decision on the halal nature of the product in front of him (attribute inference). That is to say, based on prior general knowledge (for example, “being in a region with many Islamic followers, the shop owner and workers are Islamic followers, and when the targets are Muslim consumers, the products on display are halal” etc.) of what products are halal or not, products are inferred as halal without actively confirming the halal nature of those products. In the case, the inference framework is deduction inference, memory-based and singular judgment.

In the deduction inference, memory-based, singular judgment framework, a halo effect asserting that overall assessment influences the individual attribute assessment is pointed out. For example, the illogical judgment of “it must be of high quality because it is expensive (“it is expensive because the quality is high” is a logical judgment). In this kind of decision-making, there is the danger that companies sometimes face intense emotional reactions from the customer. For example, Muslim customers implicitly presume that products are halal and generally don’t ask for proof, but when a problem arises, it is pointed out that they tend to overreact.

Judging halal by syllogism

On the other hand, halal certification is an external stimulus certifying something as halal. When halal certification is clearly shown, inference changes from memory-based to stimulus-based. That is to say, it becomes a deduction inference, stimulus-based singular judgment. In this case, individuals make logical judgments using syllogism. In other words, the reasoning behind the judgment is “this product has halal certification, halal certification proves it is halal, therefore this product is halal.”

When it comes to judging if products without halal certification are halal, Muslim consumers (no matter how illogical) are able to exercise good judgment. On the other hand, when judging if a product is halal with very limited information, or when customers overreact, halal certification functions as evidence for Muslim consumers to make logical decisions. In the future, halal certification may not be completely necessary for Japanese companies when dealing with local customers in Islamic countries. On the other hand, when providing goods for Muslim consumers in regions where Islamic followers are in the minority, or when you want to urge them to make logical judgments, halal certification will be effective.

The negative side of halal certification

In contrast, we must also pay attention to the negative aspects of halal certification. Namely, (1) halal certification is nothing more than proof of the halal nature of products under Islamic law, and not a guarantee of quality. (2) Because of ingredient and method constraints, there is a danger that quality will be deemed inferior. Also, (3) there are times when halal certification is associated with government (for example, Bumiputera in Malaysia.) And, (4) despite a gradual increase in the purchasing power of Muslim consumers because it hasn’t reached the level of the Chinese in Southeast Asia, for example, there is a danger that products will be viewed as those for people in the low income bracket. Furthermore, (5) many Western luxury brands are not certified as halal.

Because of this, there is a risk that non-Muslim consumers believe they are not the targets of halal certified products, and infer that they are not always of high quality (on the other hand, when the is no halal certification, because there is a vagueness in making judgment on the halal nature of a product, it is easy to infer it as halal for Muslim consumers, and unrelated to Islam for non-Muslin consumers.)

Changes in clues through induction inference

When halal certification is undertaken as an external stimulus, the inference framework of non-Muslim consumers can be thought to be as induction inference, stimulus-based singular judgment (on the other hand, the inference framework of Muslim consumers under halal certification was deduction inference, stimulus-based singular judgment.) We can understand this because non-Muslim knowledge of halal products does not come from general rules leading to deduction inference (for example, it is halal so it tastes bad), but individual experiences leading to induction inference (it tasted bad when I ate it at a restaurant.) So, in induction inference, various hints are used to make inductive decisions. For example, regarding halal certified chocolate made by a Japanese maker, the product will be rated through multiple individual experiences related to halal, Japanese makers, and chocolate etc.

When focusing on signs in induction inference, stimulus-based singular judgments, clue interaction effects are at work. That is, when making decisions using multiple competing clues, if the predictive capability of a certain clue can be deemed to be high, that clue is regarded as important, and the importance of the competing clues declines.

By using these effects, we can correct the negative inferences by non-Muslim consumers toward halal certified products. That is to say, after emphasizing clues other than the halal certification, such as being made in Japan etc., the importance of those clues rise, and the importance of the halal certification declines. For example, when the competing clues are “halal certification” and “made in Japan”, when the “it is made in Japan so it must taste good” judgment is more correct than the “it is halal so it must taste bad” judgment, importance is placed on the made in Japan clue, and the focus is taken away from the halal certification. With this, it is possible to avoid negative inference from non-Muslim consumers when the product is burdened with halal certification as a stimulus.

As another measure, I can think of using different inference frameworks depending on the product category as an example. For example, in categories where the halal nature is difficult to determine (spices etc.), in contrast to encouraging stimulus-based inference with halal certification, for categories where the halal nature is easy to judge or pose no problems (drinking water, food of plant origin etc.), we should settle for memory-based inference without getting halal certification.

Extension of the inference framework

Here I have depended on consumer inference frameworks and looked into the business effects and issues of halal certification. This discussion doesn’t stop at halal certification, and can be extended to various topics. For example, based on the indication that the halal certification issue is very similar to food safety and mislabeling issues, by using inference frameworks we can address a wide range of issues faced by food manufacturers. Also, if halal certification is considered a brand, the brand can be extended as a clue for product evaluation.

Hiroshi Kumakura was born in Tokyo in 1961.
In 1985, he graduated from the School of Commerce, Waseda University
In 1993, he completed master’s degree at the Graduate School of Business Administration and Public Policy, Tsukuba University
In 2002, he completed doctorate at the Graduate School of Decision Science and Technology, Tokyo Institute of Technology
He holds a Ph.D. (Tokyo Institute of Technology)
He started current position in 2012 after working as a professor at Senshu University etc.
His current research topics include
global market structure and behavior formation mechanisms through consumer, business and market micro-macro links etc.
Recent publications include,
Hiroshi Kumakura, Yukiko Kawano (2014), “EEG Measurement of Serial TV Drama Viewers – Can Reactions to First Viewing Explain Future Behavior?” Kigyo Kenkyu, 25, 95-107
Hiroshi Kumakura (2010), “Market Structure Analysis Using Birth and Asymmetric Growth of Products Based on a Mechanism of the 80/20 Law: Why and How the 80/20 Law Emerges,” Bulletin of Research Institute of Commercial Sciences, 42 (2), 1-51.